I show that the relative strength of the real estate sector against the S&P 500 Index remains closely linked to the 30 year bond yield. I show that despite yield still being historically low after the post US election increase, a new long term relative low has been made. I suggest an alternative sector for relative return investors.

I’d like to have been able to publish this a week ago, before the resistance break. There is an editorial process at seekingalpha.com and I had to revise the article. It is right that they have that; otherwise it would just be a mass participation blog, otherwise known as social media.

In other news, I passed the Chartered Market Technician (CMT) Level Two exam in October.

]]>https://wingcapital.wordpress.com/2016/11/03/daily-commentary-lucky-7-or-not/
Thu, 03 Nov 2016 08:08:37 +0000wingcapitalhttps://wingcapital.wordpress.com/2016/11/03/daily-commentary-lucky-7-or-not/Another rough day for US markets, which followed through to previous day’s weakness with another -13pt drop in the SPX, an astonishing 7th day in a row in the red – we will get to that statistical phenomenon later. The Dow was dragged down 78pts, and although remains above yesterday’s low, it closed below the breakout horizontal support to become in sync with SPX.

Today we woke up to a weaker than expected ADP number which came in at 147k vs 165k expected and set the weak tone earlier on, before a non-event from FOMC meeting during which “The Federal Reserve kept interest rates unchanged on Wednesday in its last policy decision before the U.S. election, but signaled it could hike in December as the economy gathers momentum and inflation picks up.”

A bout of disappointment for those hoping for a more dovish message to save the markets, as they proceeded to close near the lows on the day. The VIX was also up 7 days in a row at 19.3% and closed above the September swing highs.

Another devastating day for crude oil, which plunged -3% and briefly touched the 44 handle before closing above 45, effectively wiping out all gains since the late September boost. More crucially, all trendlines were sliced through like butter, and we may ultimately drop to 200DMA at 43.5 area.

Gold continue its resurgence on the back of weaker US dollar and risk aversion, but now all eyes on whether it can get decisively above 1310 handle to negate a large H&S pattern. Until then gold bulls are advised to take profits and wait for further confirmation of bullish signals. Bears can take a stab at a short position here for a pullback towards 1260 if the H&S pattern plays out.

Back to the equity markets, it was red across all sectors with IBB leading the charge on the way down while the rush out of REITs (IYR) and Utilities (XLU) continued another day. No signs of relief yet for small caps (IWM) as it made yet another lower low down to 115 handle. The biggest question now is, are we finally going to bounce after 7 days of consecutive losses in SPX? We did a statistical analysis by looking at all the occurrences during which SPX closed 7 days red in a row since 2000. We found out there were only 3 such occurrences excluding today, illustrating the extent of this anomaly currently happening in the market.

Looking at the chart, we can see the other occurrences were during Oct 2008, Aug 2011 and November 2011, all of which were clearly in the midst of a major correction/crash (Great Financial Crisis, US Downgrade, Europe Crisis). In the case of Oct 2008, the streak extended to 8 days before being snapped. The next 2-day, 5-day and 20-day return following the streak in all the cases are shown below:

Return of SPX after 7 Negative Day Streak

Next 2 Days

Next 5 Days

Next 20 Days

2008/10/9

9.77%

4.49%

0.63%

2011/8/2

-4.40%

-11.74%

-3.84%

2011/11/25

3.10%

5.27%

5.92%

2016/11/2

?

?

?

Average

2.83%

-0.66%

0.91%

Empircally, Oct 2008 and Nov 2011 had sharp bounces of around 5% in the next 2 to 5 days, while Aug 2011 experienced a disastrous waterfall plunge of 11%. What does that mean for today? While one may infer we have a 66% chance of bouncing in the coming days, one thing that is in common among all 3 cases is that volatlity is here to stay with us with rollercoaster moves up and down.

One thing lacking in today’s stock market is the capitulation/panic selling common in major corrections such as in the aforementioned time periods. It is in our view that such moves are necessary for bottoms to be made, as sentiment reaches an extreme which usually signals a turning point. Today we clearly still do not have that condition, as down moves in the SPX have been limited to 10-20pts so far. Hence we will need to be prepared for potential of more severel plunges, and rely on sentiment indicators (TRIN, put-call ratio, etc.) to help us gauge potential bottoms. Right now in our opinion cash is the best position and look to trade in and out intraday until we see light in the tunnel.

Week Ahead – Events and Economic Data

11/3 Thursday

Time

Event / Data

8:30am

Initial Jobless Claims

10:00am

ISM Non-Manufacturing

11/4 Friday

Time

Event / Data

8:30am

Nonfarm Payrolls (NFP)

4:00pm

FOMC Member Stanley Fischer Speaks

]]>https://wingcapital.wordpress.com/2016/10/06/daily-commentary-a-spark-from-us-data/
Thu, 06 Oct 2016 08:11:36 +0000wingcapitalhttps://wingcapital.wordpress.com/2016/10/06/daily-commentary-a-spark-from-us-data/US equity markets snapped a two day losing streak after a spark from a much better than expected non-manufacturing ISM number. To recap, “A gauge of U.S. service-sector activity rose to the highest level in nearly a year in September, a sign of steady growth for a key segment of the economy. The Institute for Supply Management on Wednesday said its nonmanufacturing index jumped to 57.1 in September from 51.4 in August. That was the highest level since October 2015. Economists surveyed by The Wall Street Journal had expected a September reading of 53.0.”

With services being the main driver of US economy, this data is usually regarded tier 1 before NFP, and hence the significance of the jump. It also helped lift broader equity indices SPX and DOW off a crucial trendline support back towards the top of the much documented tightening wedge. For the DIA, it is the 4th time tagging the descending trendline, so we shall see if there is enough conviction to carry over the hurdle for further upside.

Safe havens (Treasuries, Gold and Yen) were once again under pressure in the risk-on environment, with 30-year bond yield up another 3bps and inching closer to the September highs of 2.5%. And unsurprisingly, the worst two performing sectors were once again REITs (IYR) and Utilites (XLU), but this time IYR was hit much harder, plummeting 2% right to 200DMA. More key support looms at 65 which is the bottom of a bullish channel.

And the top performer? You guessed it, it’s the financials (XLF) which were the sole beneficiary of higher rates, up 1.6% with little resistance until the September highs of 19.8. All eyes on NFP on Friday – shall we get another beat and leg up in interest rates, we expect XLF to make new highs as well.

In other news, Twitter (TWTR) was decimated after hours after reports that Google and Walt Disney are not bidding for the company. “Citing anonymous sources familiar with the matter, Recode first reported that Google “was not moving forward with an effort to buy it [Twitter] at this time.” And three hours later, it published another report about Disney, once again citing unidentified people close to Disney, who said “the media giant has decided not to move forward” with a bid to acquire Twitter.”

TWTR plunged to 22 handle after earlier testing the key 25 resistance that we highlighted before. Filtering through the noise, technicals suggest the LT trend has turned bullish and dips to 20 would be a great buy.

Days Ahead – Events and Economic Data

10/6 Thursday

Time

Event / Data

8:30am

Initial Jobless Claims

10/7 Friday

Time

Event / Data

8:30am

Nonfarm Payroll (NFP)

]]>https://wingcapital.wordpress.com/2016/10/04/daily-newsletter-getting-warmed-up/
Tue, 04 Oct 2016 11:32:23 +0000wingcapitalhttps://wingcapital.wordpress.com/2016/10/04/daily-newsletter-getting-warmed-up/US markets had a relatively quiet day to start what could arguably be dubbed the most important quarter of the decade. SPX was down a slight 0.3% at 2161, finishing off lows from 2154. In terms of events, domestically we had the Manufacturing ISM which was better at 51.5 vs. 50.3 expected. The main headline was across the Atlantic Ocean in London, where PM Theresa May announced over the weekend that Article 50 will be triggered by March next year. As a result, pound renewed its plunge as GBP/USD plummeted to 31 year fresh lows as we speak.

That said, the correlation between Pound or Brexit vs world stock markets has unofficially dropped to zero. Or inversely correlated to UK stock market where the “FTSE 100 smashes 7000 and touch fresh 16-month high.” as exporters celebrate weaker pound.

It’s now largely accepted Brexit is a localized event, and so it will only be noise to the rest of the world. Meanwhile, back to the US markets, things are just getting warmed up. Technically, SPX and Dow are in a tightening wedge which ultimately will break one way or another, and improving technicals are leaning towards a break upward.

On the heels of stronger than expected economic data, interest rates turned higher with TLT down -0.3%. But rate-sensitive sectors were hit much harder with IYR and XLU resuming their recent selling pressure, down -1.8% and -1.4% respectively. It appears fund sector rotation is positioning for higher rates in the future which would explain the high volume selling.

Safe-haven selling was another theme yesterday, with Gold and Yen both down and threatening to break their respectively wedges.

The USD/JPY has been in a vicious downtrend since earlier the year which caught many offguard, as the unlimited printing by BoJ failed to dampen the appreciation of its currency. But the tide may be turning finally as it looks to pierce through this line in the sand. More strong data out of US will certainly serve as tailwind as well.

Portfolio Commentary

Our portfolios are generically down on the day along with broader markets. We closed our long-term position OKE, one of our favorite names which we were long since April this year with a 43% profit. Energy sector has served us well this year as we capitalized on its recovery, and while we are still long a few energy stocks, we are actively looking to identify and rotate into the next best performing sector. Our quantitative strategies detected select names in the Tech sector over past month such as TWTR and GPRO which are recovering off multi-year bottoms. WDC and STX are two other breakout names off recent lows which we have had success so far.

Chart in Focus

KMX – Medium-Term Long

Target: 55.25

Entry Point(s): 52.52, 51.92

Comments: Formed bullish hammer candle after holding 200DMA twice. A relief rally would bounce back towards broken swing point of 55 area

Entry Point(s): 95, and on confirmation of break, short of any rallies

Comments: Yearlong bull trend looks set to end on a confirmed weekly close below 95.

Day Trading Charts & Parameters

Futures

Dow 30

Support: 18050

Resistance:18218, 18405

S&P 500

Support: 2148, 2127

Resistance: 2163, 2174

NDX 100

Support: 4820

Resistance: 4888

Crude Oil

Support: 45.6

Resistance: 49

Gold

Support: 1305, 1260

Resistance: 1342

10-Yr Treasury Note

Support: 130.86, 130

Resistance: 131.86

US Dollar Index

Support: 95.26 , 96

Resistance: 96.8

Nikkei 225

Support: 16625, 16360

Resistance: 16900

Currency Pairs

USD/JPY

Support: 102.1, 101.58

Resistance: 103.13, 104

EUR/USD

Support: 1.1172, 1.10

Resistance: 1.1246

GBP/USD

Support: none near term

Resistance: 1.2837

AUD/USD

Support: 0.7640, 0.7600

Resistance: 0.7695

]]>https://thedangerpoint.com/2016/08/31/cash-is-trash/
Wed, 31 Aug 2016 13:17:45 +0000thedangerpointhttps://thedangerpoint.com/2016/08/31/cash-is-trash/“Everyone knows that cash is trash” was mantra of the 80’s and 90’s. Anyone with an opposing view was given a condescending look and a quick dismissal.

To hear that quote again these days would be doubtful. Now we’re on the other side of the coin. Maybe the quote should be: “Everyone knows that cash is stashed”

The Germans are doing it. The Japanese are doing it. Maybe everyone will be doing it or attempting to, … most likely too late.

With that in mind, would it make sense to tie up ones ‘cash’ in possibly the most illiquid investment vehicle there is (other than Beanie Babies)?

]]>https://thedangerpoint.com/2016/08/30/high-school-upside-down/
Tue, 30 Aug 2016 15:41:08 +0000thedangerpointhttps://thedangerpoint.com/2016/08/30/high-school-upside-down/The markets are lot like high school … only in reverse.

In high school, if you were elected Class President, it was a popular harbinger of present and future life success.

No matter that such designations were rarely confirmed in actual life (as evidenced by the 80% flunk-rate of my ‘popular’ roommates in college). In high school, immature mob psychology ruled the day.

In the markets, if you are elected class president, or in this case get your own index, it’s an indication that a top may be near or past.

]]>https://wingcapital.wordpress.com/2016/07/30/wingquant-monthly-portfolio-update-20160730/
Sat, 30 Jul 2016 09:19:11 +0000wingcapitalhttps://wingcapital.wordpress.com/2016/07/30/wingquant-monthly-portfolio-update-20160730/As July drew to a close, it was no doubt a banner month for US equity markets, which broke out to all time highs with SPX +3.5% to 2173. After shaking off Brexit panic in June, investors further shook off noise from central banks and switched focus to stronger than expected earnings from the likes of AAPL, FB and AMZN.

In our WingQuant Growth Portfolio, we were able to ride the wave with the broader market and was up 3.69%. Our holdings as of month-end are as follow:

Symbol

Name

Industry

Initiate Date

Initiate Price

Current

Return % since Inception

NEM

Newmont Mining Corp. (Hldg. Co.)

Materials

2016/1/28

19.50

44.00

126%

AKS

AK Steel

Materials

2016/3/3

3.61

6.56

82%

ALB

Albemarle Corp

Materials

2016/4/4

65.08

84.17

29%

RRC

Range Resources Corp.

Energy

2016/4/8

34.90

40.31

15%

FCX

Freeport-McMoran Cp & Gld

Materials

2016/4/11

9.76

12.96

33%

OKE

ONEOK

Energy

2016/4/13

31.33

44.79

43%

SWN

Southwestern Energy

Energy

2016/4/14

10.75

14.58

36%

IRM

Iron Mountain Incorporated

Industrials

2016/4/22

35.10

41.21

17%

NVDA

Nvidia Corporation

Information Technology

2016/5/16

42.08

57.10

36%

NFX

Newfield Exploration Co

Energy

2016/5/18

39.21

43.30

10%

STJ

St Jude Medical

Health Care

2016/5/19

76.20

83.04

9%

MLM

Martin Marietta Materials

Materials

2016/5/25

192.75

202.65

5%

MRO

Marathon Oil Corp.

Energy

2016/6/6

13.96

13.64

-2%

DVN

Devon Energy Corp.

Energy

2016/6/8

37.52

38.28

2%

URI

United Rentals, Inc.

Industrials

2016/6/22

69.01

79.67

15%

ULTA

Ulta Salon Cosmetics & Fragrance Inc

Consumer Discretionary

2016/6/29

240.66

261.21

9%

WMB

Williams Cos.

Energy

2016/6/30

21.63

23.97

11%

HPE

Hewlett Packard Enterprise

Information Technology

2016/7/11

19.34

21.02

9%

AMAT

Applied Materials Inc

Information Technology

2016/7/12

25.41

26.29

3%

EQT

EQT Corporation

Energy

2016/7/18

75.47

72.86

-3%

NAVI

Navient

Financials

2016/7/21

14.29

14.20

-1%

JEC

Jacobs Engineering Group

Industrials

2016/7/28

54.08

53.52

-1%

GRMN

Garmin Ltd.

Consumer Discretionary

2016/7/28

53.54

54.33

1%

BSX

Boston Scientific

Health Care

2016/7/29

24.28

24.28

0%

CHK

Chesapeake Energy

Energy

2016/7/29

5.42

5.42

0%

DLR

Digital Realty Trust

Financials

2016/7/29

104.46

104.46

0%

Average

19%

Allocation %:

In terms of portfolio actions, our quant model prompted us to cut losses on MUR (-11%) and exited CMA (flat), while reentered on CHK and initiated new positions on BSX and DLR. We remain overweight on outperforming energy and material stocks while selectively long in various other sectors notably in health care.

Key Holding to Watch Next Month – MLM (Martin Marietta Materials)

We are long MLM since end of May and is up 5% since inception so far, and technicals are pointing to further gains as chart pattern shows a breakout pattern which may see a parabolic up move in coming weeks:

Next week, earnings are scheduled to be released on Tuesday which will serve as catalyst. Fundamentally, Seeking Alpha recently published an analysis regarding the growth story of MLM which has a upside target of $209:

]]>https://bartscharts.com/2016/05/09/real-estate/
Mon, 09 May 2016 22:24:33 +0000BARThttps://bartscharts.com/2016/05/09/real-estate/I know it’s cyclical and it’s location location location but I also know that some didn’t too bad in the next downturn and some did really bad …I see some major targets being hit and or a little higher in real estate.

Perhaps I’m an idiot, but me and the wife close on the sale of our house in two weeks. I am so glad to be liquid for the forthcoming storm … hoping to buy a MONSTER Beach House in the Outer Banks after the “flood” of deflation and debt reach our shores.

]]>https://gerringcapital.com/2015/02/08/did-a-market-alarm-go-off-on-friday/
Sun, 08 Feb 2015 19:49:13 +0000Eric Parnellhttps://gerringcapital.com/2015/02/08/did-a-market-alarm-go-off-on-friday/The trading day seemed like most any other on Friday. Following what was a better than expected U.S. employment report, stocks initially advanced to the upside before fading into the afternoon and ending the trading day modestly lower. Not much notable here. But when digging under the surface, the performance coming out of selected sectors may be tripping the alarm bells that more downside pressure may be soon to come.

]]>https://jpaulocoelho.wordpress.com/2015/02/08/weekend-market-rundown-for-02082015/
Sun, 08 Feb 2015 07:09:51 +0000jpaulocoelhohttps://jpaulocoelho.wordpress.com/2015/02/08/weekend-market-rundown-for-02082015/It was a strong week for equity markets all around the world, with the US leading the way.

Although the Nasdaq was unable to break through its recent range, the summation index remains slightly bullish heading into next week. Both the S&P500 and the Russell made a new higher high and are atop of their respective ranges, so it will be very interesting to see where we go from these levels. A pause, slight pullback before a move higher or another trip to the bottom of the trading range? Time will tell…

Crude Oil, easily one of the biggest losers of the past few months, staged a remarkable week, up more than 9% and taking some pressure off the overall market.

On Friday, on the heels of another great Labor Department jobs report, the market was under pressure as attention shifted to the Fed and a potential interest rate increase sooner rather than later. With that, interest rate sensitive sectors (i.e. $TLT Treasury Bonds, $IYR Real Estate and $XLU Utilities) sold off hard whereas $XLF Financials were, by far, the best performer of the day.

The Fed and President Obama have been extremely accommodating for the length of his presidency, and with interest rates impacting mortgage rates, credit card rates, loan rates, as well as savings, money markets and CD rates it’s hard to conceive a rate hike before the new president takes office in early 2017. Though Fed Chairwoman Yellen has warned investors that an increase is very likely for 2015, Fed Futures point to a reduced (27%) chance of increased rates by June and 60% by September.

Volatility will likely stay “elevated” as geopolitical events (i.e. Greece, ISIS, Russia and Ukraine) continue to hit the daily headlines, 700+ companies are scheduled to report earnings and 2 Fed Presidents will speak pre-market on both Tuesday and Wednesday.

Performance Summary for the week of Feb 2 – 6, 2015:

]]>https://raretimestrader.com/2014/10/21/recent-trades-updated-wal-mart-and-real-estate-stock-rotations/
Tue, 21 Oct 2014 16:38:05 +0000raretimestraderhttps://raretimestrader.com/2014/10/21/recent-trades-updated-wal-mart-and-real-estate-stock-rotations/The position in WalMart (WMT) against NASDAQ 100 Trust (QQQ) was closed for a profit of 4.1%. This was posted on 15 October.

In early September, I updated the stop loss on my trade in Vornado Realty Trust (VNO) against iShares U.S. Real Estate (IYR). This trade has now been stopped out. It didn’t follow through on its set up but through taking half and moving the stop loss to break even, a small gain was made, maybe enough to cover dealing costs.

The remaining half was stopped out at the entry level of 1.46307 on 17 October. With a gain of 1.2% on the first half portion of the trade, total gain was 0.6%.

Vornado Realty Trust (VNO) v IYR

The trade was entered at A, halved with the stop to break even at B, stopped out at C. At X, there was a bullish RSI divergence, albeit with RSI slightly above 30 but this shows again that these divergences work. Whilst the trade hadn’t made anything, the weekly RSI and MACD divergence set up remains in place.

Update on Washington Real Estate (WRE)

This is a slow burner, I last updated this chart in the early September posting (above). WRE against iShares U.S. Real Estate (IYR) continues to develop its base. This pair is inversely correlated with the broad market (WRE is a defensive stock).

WRE v IYR daily chart

Between the red arrow (23 September) and the blue arrow (15 October), the broad market fell and WRE outperformed IYR.

I’m expecting this base to continue to build, the moving averages to cross and an uptrend to emerge but these long term moving average crossover charts do not give the timing. For that we need other tools.

]]>https://raretimestrader.com/2014/09/03/real-estate-stock-rotations-update/
Wed, 03 Sep 2014 19:39:51 +0000raretimestraderhttps://raretimestrader.com/2014/09/03/real-estate-stock-rotations-update/In early July, I showed the trade entry criteria for a short position in Vornado Realty Trust (VNO) against iShares U.S. Real Estate (IYR). The entry signal was given on 17 July and the trade has run into a small profit.

Vornado Realty Trust (VNO) v IYR

The initial entry signal was not timely but the longer term RSI and Performance Ranking divergences took effect and the pair declined up to 25 August. There has been a marginal recovery. Now, I take half of the profit (1.2% drop) and move the stop loss to break even

Update on Washington Real Estate (WRE)

I showed WRE v iShares Real Estate (IYR) on 09 June and updated the situation on 07 July. There has still not been a moving average crossover but there has been a break above the 09 June high.

WRE v IYR daily chart

The Performance Rank (PR) for WRE against the other components of the real estate sector ETF (IYR) is at its highest since 2008, when the last phase of sustained outperformance started (A).

WRE v IYR weekly chart

A similar PR level was reached in 2006 at B but there was not then the combination of factors (pending long term moving average crossover, previous bullish 14 week RSI divergence) that currently exist.

]]>https://raretimestrader.com/2014/07/07/vornado-real-estate-trade-sets-up/
Mon, 07 Jul 2014 07:55:33 +0000raretimestraderhttps://raretimestrader.com/2014/07/07/vornado-real-estate-trade-sets-up/In mid June, I showed Vornado Realty Trust (VNO) setting up against iShares U.S. Real Estate (IYR). I will update the situation and set out the trade entry criteria.

Vornado Realty Trust (VNO) v IYR

The late May 14 week RSI bearish divergence remains in place, along with MACD divergence (not shown here)

A marginal new weekly closing high was formed on the ratio on 27 June, which had divergence on the Performance Ranking (PR)

Daily chart

The ideal daily RSI divergence criteria have been met

The daily closing high for the ratio was on 02 June at 1.49749

A break below the 13 June low of 1.46605 (below the red line) will be a sell signal

Earnings for VNO are released on 04 August (this can be checked on www.thestreet.com/event-calendar/index.html). This gives time for the trade to be triggered and run for a few weeks before earnings. Don’t open trades right near earnings releases

Summary

A short position in VNO v IYR will be opened on a daily close below the 13 June low. The stop loss is a daily close above the 02 June high (2.14% higher)

Update on Washington Real Estate (WRE)

I showed WRE v IYR on 09 June. I noted that long term investors may wait for a moving average crossover as a signal on this and the broader market (given WRE’s defensive nature). This might take a while but the next thing to look for is a break above the 09 June high. Even then, this will not be a defined entry signal, the base could take longer to form.

WRE v IYR daily chart

]]>https://raretimestrader.com/2014/06/16/us-real-estate-sector-examples-continued/
Mon, 16 Jun 2014 19:15:09 +0000raretimestraderhttps://raretimestrader.com/2014/06/16/us-real-estate-sector-examples-continued/Following on from last week, the next example I will show is that of Vornado Realty Trust (VNO). This is an industrial & office REIT and is the 10th largest holding of the iShares U.S. Real Estate (IYR).

Vornado Realty Trust (VNO) v IYR

The 14 week RSI formed bearish divergence at the latest high at the end of May

There was also bearish divergence on the MACD

Daily chart

The 14 day RSI first formed divergence above 70 in March (first dashed line) then another divergence below 70 (second line), coinciding with the weekly divergence

From the low in May 2013 to the high on 02 June, VNO has outperformed IYR by 29.6%. This year of outperformance is likely over and there could be a significant pull back.

]]>https://raretimestrader.com/2014/06/09/my-methods-applied-to-the-us-real-estate-sector/
Mon, 09 Jun 2014 11:37:53 +0000raretimestraderhttps://raretimestrader.com/2014/06/09/my-methods-applied-to-the-us-real-estate-sector/The blog has taken a bit of a back seat with various other things going on. I’m going to show some current examples of my methods using components of the iShares US Real Estate (IYR), starting off with a defensive stock.

The relative had a bearish RSI divergence at the high of February 2009

The late 2012 bullish divergence did not stop the decline (so divergences aren’t flawless) but another RSI divergence formed in February 2014 against the summer 2012 low

Long term moving average chart: WRE v IYR

The 30 and 40 week moving averages have not crossed in over four years

There is now bullish divergence on the MACD (this is a %age difference MACD, so doesn’t show divergence just because the ratio gets smaller)

Longer term investors in the sector or those looking for clues on the broad market might want to wait for a moving average crossover.

Short term Performance Ranking chart: WRE v IYR

Knowing that the longer term developments are taking shape, shorter term traders could have used the Performance Rank (PR) as confirmation of the short term break higher.

From 09 April, WRE showed an improving PR (its price performance compared to all other components of IYR), despite the relative low being one month later

When the relative line moved to a six week high, this was confirmed by the PR moving to a 2014 high. A short term overweight position in WRE in the sector could have been taken

More examples from the US real estate sector will follow in the coming weeks.

]]>https://ispyetf.wordpress.com/2014/05/27/quirky-but-accurate-indicator-housing-sector-troubles-likely-to-continue/
Tue, 27 May 2014 14:34:22 +0000Simon Maierhoferhttps://ispyetf.wordpress.com/2014/05/27/quirky-but-accurate-indicator-housing-sector-troubles-likely-to-continue/Sometimes the oddest correlations make the best forward-looking indicators. This is certainly the case with lumber and the housing market. Here’s what this odd but accurate indicator ‘sees’ ahead for U.S. real estate.

Several times in the past we’ve looked at the correlation between lumber and housing – related ETF: iShares US Real Estate ETF (NYSEArca: IYR).

It’s an off the wall kind of an indicator, but it’s proven more accurate than any other housing indicator.

To get the correlation right, we need to set lumber futures forward by about 14 months.

The chart below does just that, as it plots lumber against the PHLX Housing Sector Index.

As the gray oval on the right shows, lumber saw a big pop and drop in 2012/2013.

The two gray ovals to the left illustrate that the magnitude of such sizeable pops and drops tends to appear muted in the housing sector, nevertheless it suggested an eventual slowing of the housing market.

Lumber is currently at an interesting juncture, as lumber prices were unable to break above resistance and just fell to test support.

As of right now, lumber suggests that the housing market is not ‘out of the woods’. The housing blues may start all over if support for lumber fails.

This would not only affect multi-billion dollar ETFs like the Vanguard REIT ETF (NYSEArca: VNQ), or SPDR Dow Jones REIT ETF (NYSEArca: RWR), but also millions of Americans.

A proprietary analysis of supply and demand for the SDPR S&P Homebuilders ETF (NYSEArca: XHB) also shows that demand for homebuilding stocks is deteriorating.

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Wed, 21 May 2014 20:08:09 +0000Eric Parnellhttps://gerringcapital.com/2014/05/21/the-stock-sectors-set-to-streak-into-2015/The Fed’s QE3 stimulus program is scheduled to finally come to an end in November 2014 after an extended period of tapering. Recent history suggests that this does not bode well for the U.S. stock market, which has struggled when standing naked without the crutch of Fed stimulus in the post crisis period. But not all stocks are created equally. For while many stock sectors certainly trailed along with the broader market without the steady flood of liquidity from the Fed, a select few demonstrated the ability to hold up well. Some even showed the ability to achieve solid gains. And while history may not necessarily repeat itself the next time around, these previously winning sectors may warrant some extra attention as QE3 draws to a close and we streak toward 2015.

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Wed, 23 Oct 2013 20:32:51 +0000optionstreaminfohttps://optionstreaminfo.wordpress.com/2013/10/23/25m-bullish-bet-on-real-estate/A large bullish bet was placed today on IYR, a real estate sector ETF, at 3:23pm. The trader entered into a synthetic long position on ETF by purchasing 10’000 December 2013 $75 calls and selling the same number of December 2013 $75 puts. The volume was much larger than the open interest, which indicates that this is a brand new position. This trade implies a large $25m bullish bet on the U.S. real estate. It is worth noting that the technical set up favors further upside in IYR prices, as the price completed a Head and Shoulders continuation pattern.

On 23 September, a long position in iShares Real Estate (IYR) v iShares Broker Dealers (IAI) was opened. Today, I closed this as I reconsidered the short side of the trade. Here is why.

Broker Dealers (IAI) v S&P 500 Index (SPX)

Whilst there was RSI divergence in July 2013, this has not had an effect. There has been an unwinding instead

The 50/60 week MACD has crossed above zero for the first time since 2007: a long term moving average crossover. I had overlooked that aspect

The better RSI divergence was in summer 2012 because

a) It came with MACD divergence
b) The MACD divergence formed after the MACD had been negative for a long time – meeting my moving average crossover trade criteria

Focusing on the chart of the pair means you can overlook the chart of each component against the market

Reviewing trades and why they aren’t working is important for improving results

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Wed, 09 Oct 2013 19:28:23 +0000optionstreaminfohttps://optionstreaminfo.wordpress.com/2013/10/09/iyr-synthetic-long-22-7m-november-2013/A trader placed a large bullish bet on real estate through a synthetic long position on IYR. The trader purchased 10’000 November calls and sold the same number of November puts (all with the strike $69). While the latest data points on housing have shown signs of a slowdown, one metric of the housing recovery that continues to improve is the foreclosure rate. As of August, there were 939,000 homes in some stage of foreclosure, down 33% from 1.4 million a year earlier. Whether this reason or some other, the trader committed over $22m into a long position on IYR, a real estate ETF.

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Wed, 25 Sep 2013 15:23:21 +0000Simon Maierhoferhttps://ispyetf.wordpress.com/2013/09/25/world-is-now-richer-than-ever-before/Thanks to the phantom economic recovery, mainly noticed by rising share prices in stock exchanges around the world, aggregate global wealth has risen to a new staggering high … but Draghi finds a fly in the ointment.

Based on Allianz’s Global Wealth Report, global shareholders are richer than ever before.